Alcan shares surge on its rejection of Alcoa bid

MONTREAL - Shares of Alcan Inc.rose by over 3 percent on Wednesday as the Canadian aluminium maker opposed a $28 billion takeover bid by U.S. rival Alcoa Inc., prompting speculation of a counterbid.

Alcan stock was up C$3.23 at C$91.45 on the Toronto Stock Exchange and $3.43 at $84.49 on the New York Stock Exchange at 1651 GMT.

The share price jump came as bankers expected counterbids to emerge for the company, and as the Globe and Mail newspaper reported that Alcan was in talks with BHP Billiton as part of its plan to consider alternatives to the Alcoa offer.

A spokeswoman for BHP Billiton, whose U.S.-listed shares were up $1.04, or 2 percent, at $51.79 in New York, declined to comment on the report.

Sources familiar with the matter on Wednesday said Alcan is still mulling its options but is likely to try to start some form of auction and encourage counterbids.

The situation is at a very early stage and likely to go on for several months before playing out, the sources said, adding it is too early to pick likely favorite in any bidding war.

Among potential counterbidders are Xstrata , BHP, Rio Tinto , and Anglo American , banking sources added.

Alcoa shares rose $1.53, or 3.9 percent, to $40.49 in New York on Wednesday morning.

Alcan's shares were still trading above Alcoa's cash-and-stock offer of $75.08 a share. Alcoa was offering $58.60 a share plus 0.4108 of its shares, for Alcan.

On Tuesday, Alcan rejected the hostile takeover bid from Alcoa, but said it was in talks with third parties.

Alcan said Alcoa's offer does not adequately reflect the value of Alcan's assets, strategic capabilities and growth prospects.

Speaking to Reuters shortly after rejecting Alcoa's bid on Tuesday, Alcan Chief Executive Dick Evans said his company was in discussions with other parties, but would not say which ones.

"Our board has asked us to evaluate all alternatives, both internal and external," he said.

Evans would not say whether Alcan would consider trying to take over Alcoa.

Alcoa responded on Tuesday that it had offered a good price for Alcan, but the big U.S. aluminium maker would not comment on its next step.

"Our offer is full, fair and balanced," Alcoa chief financial officer Charles McLane told the Reuters Global Mining and Steel Summit in New York.

McLane declined to comment on specifics of the rejection until he could review it with fellow Alcoa executives.